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Australian-listed Fairfax Media has ceased discussions with both its would-be suitors in the wake of TPG Capital having walked away from its $A2.76 billion takeover offer during the weekend.
Fairfax, whose stable of newspapers includes The Age and The Sydney Morning Herald, can now forge ahead with earlier plans to spin off its lucrative online property classifieds business Domain for an ASX listing.
Fairfax shares took a more than 11% nosedive to A97.5c following the update.
In an expected market update yesterday, Fairfax chairman Nick Falloon said given Fairfax had not received a binding offer from either suitor, the board had ``ceased discussions with both parties''.
``The Fairfax board believes the company has an attractive future and throughout this process has continued to pursue its standalone business plans, including the separation of Domain,'' he said.
TPG and Ontario Teachers' Pension Plan Board and rival suitor San Francisco-based investment fund Hellman & Friedman were both under- taking month-long due diligence into Fairfax and had until last Friday to lodge formal offers.
However, TPG withdrew during the weekend and Hellman & Friedman failed to lodge a formal offer.
TPG was offering $A1.20 per share while Hellman & Friedman was offering between $A1.225 and $A1.25 a share, valuing Fairfax at up to $A2.87 billion.
AAP reported the option to spin off and list Domain had the backing of Fairfax investor Thorney Opportunities, whose chairman Alex Waislitz last week said the takeover approaches from TPG and Hellman & Friedman undervalued Fairfax.
Mr Falloon said yesterday Fairfax was continuing with its separation plans for Domain, which was announced in February, that it wanted to list Domain on the ASX while retaining a controlling majority of between 60%-70%.
``That [shareholder] support has been communicated during this with a strong desire for Fairfax to progress the Domain separation and continue to execute on its plans,'' Mr Falloon said.
In a briefing for analysts yesterday, Mr Falloon said while no direct reason was given for TPG's withdrawal, it appeared ``the complication of our business'' was too great and TPG did not want to buy all of Fairfax, beyond the profitable Domain business.
The Fairfax-owned Australian Financial Review reported TPG was walking away from the deal, and that Hellman & Friedman has also written to Fairfax indicating it was still interested in making an offer, but was yet to submit a binding bid.
Fairfax chief executive Greg Hywood said yesterday as part of the company's strategy its priorities included ``Further monetising New Zealand Media's leading digital brands and audience position''.
Fairfax owns stuff.co.nz, the Sunday Star-Times and other metropolitan and regional newspapers, while proposed merger partner NZME owns the NZ Herald, Herald on Sunday, nzherald.co.nz website, a range of regional newspapers, Newstalk ZB and entertainment radio stations.
At the end of May NZME and Fairfax said they were heading to the High Court to appeal the Commerce Commission's rejection of their merger proposal, NZME reported at the time.
The Commerce Commission believed the merger of the two media companies would likely lessen competition, specifically in Sunday newspapers, online news and community newspapers in 10 regions.
Fairfax is scheduled to release its full year to June financial report on August 16. It was estimating earnings before interest, tax, depreciation of between $A262 million and $A266 million, with overall group revenue down 6% during the second half of the financial year.